SkyCity will need to move quickly
By DAVID HARGREAVES - The Dominion Post | Thursday, 28 June 2007
What happens if your chief executive meets an untimely end? A nasty thought, but one that all companies – particularly big sharemarket- listed ones – need to bear in mind.
Boards of directors and the management themselves need to be conscious of bringing in and promoting fresh blood.
By doing this they can avoid the void that occurs if the top guy goes. Succession planning, it is called.
One of the most surprising and unsatisfactory things about this week's sudden departure of SkyCity managing director Evan Davies is that the board felt it needed to replace him in the interim, not with a SkyCity employee, but a director.
Now there will be inevitably something of a void for the company while a fulltime replacement is found.
And it might not be that easy to readily replace Mr Davies. Australia's Tabcorp is still looking to replace the chief executive fired this year.
Macau, which has reportedly usurped Los Vegas as the world's No 1 casino spot by turnover, is seen as the glamour spot for the upwardly mobile casino executive.
With all due respect to Auckland, the Sky Tower might not have as much appeal.
I would say the better option for SkyCity would have been to retain Mr Davies in the meantime, let him implement the restructuring programme he announced last month, and seek an orderly transition to a new boss.
It was a very different situation, but look at how Fletcher Building handled the departure of the extremely popular and successful CEO Ralph Waters last year. His replacement, Jonathan Ling, was already working for the company. As Mr Waters vacated the hot seat, Mr Ling moved in. It was a seamless transition and Mr Ling already appears to be handling the job as if born into it.
So, here are two criticisms of the Sky board.
1. The succession planning at SkyCity does not seem to have been in place.
2. Given the aforementioned situation, it leaves the company exposed to all kinds of uncertainty over coming months now the boss has gone, with no replacement on the immediate horizon.
SkyCity has badly lost its way. The blame for that lies not just with the chief executive, but with the board, too. The company needs a fresh direction. It would seem a good idea that, once a new boss is at the helm, some changes to board personnel are considered. Some of the directors have been there a very long time. As in anything there comes a time for some refreshment. Fresh faces bring fresh ideas.
But the company needs to move quickly. The longer it has with an interim CEO and without a new forward looking strategy, the more the ever-persistent rumours about it being a takeover target are likely to become reality. |
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